Employment Law Alert: Afenet vs Peter Wasswa Kityaba COCA 124 OF 2017

By: Patrick Mugalula

The Court of Appeal of Uganda delivered a pivotal judgment with respect to Employment law, in the matter of African Field Epidemiology Network (hereinafter, ‘Afenet’) vs. Peter Wasswa Kityaba (hereinafter, ‘the Employee’) on the 22^nd October, 2019.

The Court underscored the importance of employers giving employees reasons for termination or dismissal, having hearings before dismissal (and not termination), grounds for appeals from the Industrial Court to the Court of Appeal, confirmed its position on re-ppraisal of the facts, salary arrears among others.

Our John Bosco Mudde represented Dr. Peter Wasswa Kityaba at both the Industrial Court and Court of Appeal.

Background:

The Employee was a scientific writer who was hired by Afenet in September 2010 on a one-year fixed term renewable contract. Being satisfied with his performance Afenet renewed his contract several times until the last renewal in September 2015 for two years up to August 2017.

However, in February, 2016, Afenet arbitrarily terminated the Employee’s employment giving him no real reasons for the same. The Employee lodged a claim with the Kampala District Labour Office for unlawful termination which was subsequently referred to the Industrial Court as the labour officer had not resolved the dispute within the time prescribed by law.

The Industrial Court

At the Industrial Court, the court received evidence to the effect that the Employee had been a diligent employee with an immaculate performance record who had been suddenly dismissed by Afenet. It was Afenet’s submission that there was a clause in the Employee’s contract which entitled Afenet to terminate his employment on notice without need for any further justification or reasons.

Upon considering the evidence, the Industrial Court’s findings were that:

• Termination of employment is governed first and foremost by the Employment Act 2006 and thereafter the contract of employment. Where there is conflict between the law and the contract, the law will take prevail.
• An employer may discharge an employee by way of dismissal or termination. Whether an employer chooses to terminate or dismiss an employee, the employee is, by law, entitled to reasons as to why the employer has discharged the employee. Since Afenet did not give the Employee reasons for his termination, his termination was unlawful.
• The Court noted that where an employee is terminated and the reason for his/her discharge are not due to his/her conduct or performance  he/she is not entitled to a fair hearing. The court explained that common reasons for termination were expiry of contract, attainment of retirement age, restructuring, bankruptcy or dissolution of the employer.
• An employee who has been unfairly terminated/dismissed is entitled to severance pay.
• The Employee was also entitled to salary arrears from the date of his termination until the date of the award of court.
• The Employee had demonstrated that he was entitled to a promotion having both met the criteria and applied for the promotion. The refusal to grant him his promotion was malicious and unjustified.

Remedies awarded by the Industrial Court to the Employee:

• Four weeks for failure to inform the employee of the reasons for his dismissal
• A Compensatory order of four week’s pay
• Aggravated damages of UGX 70,000,000
• Special damages of salary arrears from the date of the employee’s dismissal until the date of the award at the rate of USD 2737 per month.
• Gratuity
•  General damages of UGX 150,000,000
• Severance allowance of USD 11,528
• Interest of 24% on all sums

Ultimately, judgment was entered in favour of the Employee, with the court finding that the Employee had been unlawful dismissed granting him various reliefs in the sum of UGX 430,000,000.

The Appeal:

Afenet was dissatisfied with the judgment of the Industrial Court and lodged an appeal to the Court of Appeal challenging:

• The jurisdiction of the Industrial Court to hear the claim since, in Afenet’s view it substantially differed from the claim that was originally reported to the labour officer and to the claim referred by the labour officer to the Industrial Court.
• The fact that the Industrial Court determined a Common Law claim of wrongful dismissal as opposed to the statutory claims of unfair termination and unlawful dismissal.
• That the Industrial court had awarded general damages, aggravated damages, salary arrears from termination until the date of the award, finding that there were no limits to the damages the Industrial Court could award to a claimant, interest and severance allowance.
• That the Industrial Court made awards amounting to double recovery.
• That the Industrial Court made a wrong finding when it found that Afenet had unjustifiably denied the employee his promotion.

The Court of Appeal’s decision:

In determining the appeal, the Court of Appeal found as follows:

Jurisdiction generally:

The Court of Appeal when hearing an appeal from the Industrial Court had the powers to address two core issues: firstly whether the Industrial Court had jurisdiction to entertain a claim and secondly if the Industrial Court properly applied the law when determining a claim. It was however added that an appeal as to jurisdiction could be an interlocutory appeal or a final appeal.

The Court noted that it had no powers to consider matters of fact, except if they related to a wrong application of the law. Therefore, the Court of Appeal’s duty to re-appraise evidence was not applicable to appeals from the Industrial Court to the Court of Appeal. 

Jurisdiction of the Industrial Court to handle a claim before it.

It was the contention for Afenet on appeal that the Industrial Court had no jurisdiction to handle the matter before it, in the first instance reasoning that the Industrial Court acted illegally in considering the claim. In summary Afenet argued that the Industrial Court should have restricted it to the claim originally placed before the Labour Officer, that was subsequently referred to the Industrial Court and in so doing should have only determined claims based on statutory law to the exclusion of Common Law claims like wrongful dismissal.

The Court of Appeal found that where a claim has been referred to the Industrial Court for its determination, that claim must be restated before the Industrial Court as required in the law and in the rules of the Industrial Court. The Court found that since the Industrial Court arbitrates matters between parties, it is for those parties to agree on the scope of the claim for arbitration by the Court.

The Court also found that the Labour Disputes (Arbitration and Settlement) Act 2006 (hereinafter the ‘Labour Dispute Act’) gave the Industrial Court a broader right to arbitrate any labour dispute between parties. The Labour Dispute Act defines a labour dispute as any difference or dispute between an employer or employers and an employee or employees. To conclude the matter, the Court explained that while a labour officer is restricted to mediate and conciliate matters relating to breach of the Employment Act 2006, the Industrial Court does not have the same limitation and is empowered to arbitrate matters relating to breach of the Employment Act 2006, breach of a contract of service or its terms and/or any labour dispute between an employee and employer.

As a side note, the Court emphasized that employees are at liberty to pursue public law remedies for those whose employment imputes a public law duty or ‘has features over and above ordinary employment’.

On the matter of the Industrial Court having jurisdiction to determine Common Law claims like wrongful dismissal or claims otherwise outside the letter of the law (Employment Act 2006), the Court of Appeal found that the Industrial Court is a court clothed with full arbitration powers over a given dispute, and as such any distinction between statutory causes of action and Common Law claims is academic. The Court of Appeal concluded that the Industrial Court has jurisdiction to determine any dispute concerning Common Law causes of action like wrongful dismissal.

Jurisdiction of the Industrial Court to make the awards it made.

In its appeal, Afenet also argued that the Industrial Court had no jurisdiction to make the various awards it made. In tackling this, the Court of Appeal held as follows:

• Limit to the quantum of damages that the Industrial Court may award:

The Court held that there was no law that imposed a limit on the amount of damages awardable by the Industrial Court. Furthermore, it was inimical to the jurisdiction of the Industrial Court to handle all manner of labour disputes to then turn around and claim that there was a limit on the quantum of damages it could award. This would inevitably limit the court’s jurisdiction. 

• Double recovery:

The Court disregarded this ground as Afenet did not particularize the alleged double recovery and the court could not lead itself to establish facts not argued by Afenet.

• Salary arrears:

The Court of Appeal held that the award of salary arrears from the termination of the contract of employment to the date of judgment was untenable since even an unlawful termination is sufficient to sever a contract of employment. As such the court reasoned that there could be no arrears when the contractual relationship was none existent.

• Award of additional compensation over and above the limit in section 78(3) of the Employment Act:

The Court of Appeal reasoned that there was no limitation on the Industrial Court awarding any additional compensation it deems fit and no restriction on the court basing the said compensation on salary. The Court however faulted the Industrial Court for awarding in place of this additional compensation arrears from termination to judgement. To rectify this, the Court of Appeal granted the employee USD 8,211 (three months salary) as additional compensation in place of the USD 57,169 earlier granted by the Industrial Court.

• General damages

The court emphasized that the Industrial Court had the power to grant any remedy the High Court could grant and upheld the general damages of UGX 150,000,000.

• High Court or Industrial Court

The Court emphasized that a person aggrieved with an unfair termination could choose to follow the Labour Officer to the Industrial Court route or file in the High Court, but in each case the High Court and Industrial Court should be able to determine a claim with finality.

• Aggravated damages:

The Court noted that the Industrial Court did not give reasons to support the grant of UGX 70,000,000 in aggravated damages and therefore this award was set aside since it was “hunging”.

• Interest:

The Court reasoned that the grant of Interest by the Industrial Court was fair, but the amount of 24% p.a was very high, the court replaced this with 14% p.a.

• Severance allowance:

The Court found that the severance awarded by the Industrial Court was fair and within the law.

Conclusion:

In conclusion, the Court of Appeal has in this decision affirmed the role of the Industrial Court as a court and arbiter in the resolution of employment disputes. This decision serves to empower the court, reassure employees and to keep employers alert as to the dangers of runinng roughshod in their treatment of employees. The current legal regime as interpreted by the Courts of law shows that employees are partners of their employers in the work place. It is therefore critical for employers, now more than ever, to have proper employment and human resource personnel, processes and planning in place to remain on the right side of the law. 

Summary of the key developments in Employment matters in Uganda, from this decision are:

• Reasons for termination or dismissal – The Court of Appeal upheld the reasoning of the Industrial Court that it is paramount when terminating or dismissing an employee to give them reasons as to why they are being terminated or dismissed. Naturally, since dismissals are accusatory in nature, and to the effect that the employee has either a performance issue or a disciplinary issue, the standard expected by the court is that much higher than in terminations. On the other hand, terminations relate to reasons other than the employee’s performance and therefore do not have such a high standard. Common reasons to terminate are redundancy, restructuring, expiry of contract & attainment of retirement age.
• Hearings before dismissal (and not termination) – Since dismissals are premised on the employee’s poor performance, the employee must be heard before he/she is dismissed.
• Appeals from the Industrial Court to the Court of Appeal – Appeals to the Court of Appeal to the Industrial Court maybe on only two sorts of grounds. Firstly, on questions of law and secondly on the question of whether the Industrial Court had jurisdiction to handle the claim. The court explained that the second kind of appeal may be interlocutory (during the hearing of the matter in the Industrial Court) or a fully fledged appeal at the end of a case.
• Points of law that relate to questions of fact – The Court of Appeal reasoned that it is a question of law that a lower court has misconstrued or misapplied a given fact and that may be raised on appeal. 
• Re-appraisal of facts – The Court of Appeal in hearing an appeal from the Industrial Court is exercising a special kind of jurisdiction. This not being your typical appeal, the Court of Appeal is not required to re-appraise the facts as first appellate courts usually are.
• Matters referred to the Industrial Court must be restated before the Industrial Court as provided for in the Industrial Court rules – When a matter is referred to the Industrial Court from a labour officer, the parties are required to restate the claim fully before the Industrial Court and are not restricted to the claim as it was framed before the Labour Officer because the Industrial Court arbitrates matters and parties must be free to determine the scope of their dispute under arbitration, and the Industrial Court rules and the Labour Dispute Act which establish the Industrial Court provide for the same.
• The Labour Officer may only mediate or conciliate but not arbitrate – Labour Officers are expected to mediate or conciliate matters and the Industrial Court may arbitrate them thereafter.
• Labour Officer is restricted to statutory claims but may not award reliefs for purely contractual or tortious claims – The jurisdiction of a Labour Officer is restricted to statutory claims and reliefs. He is not entitled to entertain contractual, tortious or common law reliefs.
• Public law remedies – Some employees in employment of a public nature (such as in parastatals) are free to pursue public law remedies for those whose employment imputes a public law duty or ‘has features over and above ordinary employment.’
• Common Law causes of action – The Industrial Court is empowered to entertain Common Law causes of actions. The background to this is that historically certain lawyers have challenged the Industrial Court as a special tribunal to restrict itself to the remedies and reliefs in the Employment Act 2006. The Court has asserted its jurisdiction stating that it was established under the Labour Dispute Act, (a different law from the Employment Act 2006) where the Industrial Court is a full-fledged court. The Court of appeal agreed. Justice Madrama reasoned that it was academic to split hairs between statutory and common law reliefs since the Industrial Court was a full court under the law. He added that a person who has been terminated or dismissed may opt to follow the Industrial Court route or the High Court route. Whichever route, he/she opts for must be able to determine the dispute with finality. As such the Industrial Court and High Court have a dual jurisdiction and have the power to award the same remedies.
• The Court of Appeal emphasized that though the Industrial Court ranks below the High Court, it exercises a parallel jurisdiction to the High Court in employment matters and labour disputes. Therefore, the Industrial Court is clothed with the same powers as the High Court in determining labour disputes.
• Salary arrears – The Court of Appeal rejected the remedy of the Salary arrears awarded from the date of termination to the date of judgment. The Court of Appeal reasoned that a termination though unlawful is effective and an employee can not be paid ‘arrears’ when their relationship with the employer has ceased. It is interesting to note that the Industrial Court had, after the passing of its decision in the original trial but before this appeal was determined stopped awarding this remedy with similar reasoning adding that it was unjust to pay an employee for a period of time when they were not offering services to the employer.

Should you require more information on this matter, or other aspects of Employment Law, please do not hesitate to contact John Mudde or Patrick.

This Employment law alert provides general information only. It is not intended to provide advice with respect to any specific set of facts, nor is it intended to advise on all developments in the law.